Photon Control Provides Litigation Update

BURNABY, BC, Dec. 20, 2016 /CNW/ - Photon Control Inc. ("Photon Control" or the "Company") (TSX-V: PHO), a leading developer of optical measurement technologies, has provided an update to the lawsuit commenced in the Supreme Court of British Columbia against Photon Control R&D Ltd. ("Photon R&D") and others (the "Claim"). After hearing applications brought by the Company on December 6-8, 2016 regarding Photon R&D's non-compliance with the injunctive order the Company obtained against Photon R&D in September 2016 (the "Original Injunctive Order"; see news release dated September 16, 2016 for more information) and regarding certain interim developments, the Court issued an oral judgment on December 15, 2016 pending the conclusion of the litigation or other resolution of the matter.

Among other things, the Court ordered that:

a)  

the Original Injunctive Order be modified to require Photon R&D to provide full and direct access to all intellectual property (IP) developed by Photon R&D for the Company or for specified Company customers and distributors (the "Customers");



b)  

Photon R&D and anyone acting on its behalf (the "Respondents") are prohibited from initiating contact with the Customers without the Company's express authorization and the Respondents are required to simultaneously copy the Company with all future communications between them and Customers;



c)  

the Company must provide Photon R&D with a right of first refusal for any research and design work for the Customers, subject to certain commercial terms (all of which payments, if accepted by Photon R&D, would be without prejudice to Photon R&D's claims in the litigation). The Company is not prohibited, however, from conducting R&D or having products developed by third parties; and



d) 

the Court dismissed Photon R&D's concurrent application for the payment of royalties pending the outcome of a trial.



"This decision of the Court represents a significant milestone in improving our work with Photon R&D," said Michael Goldstein, Chairman and Acting CEO. "The Order provides for improvements in transparency, IP access, and commercial terms that will certainly benefit all of our customers. It also strengthens our ability to service the needs of our customers and deliver our products and services to them in a timely fashion."

The Judge who heard the September and December applications further advised that he has been appointed to case manage the action and that he will be ready to proceed in the new year with the goal of resolving the case as soon as possible.

Background:

On September 1-2, 2016, the Company applied to the Supreme Court of British Columbia for interlocutory injunctive relief pending trial of the action. At that time, the Court granted some but not all of the relief sought by the Company. On December 6-8, 2016, the Company sought further interlocutory relief from the Court, which considered two issues:

  1. whether to order full, unrestricted access for the Company to all IP developed by Photon R&D for the Company or its customers; and

  2. whether to order injunctive relief related to Photon R&D's repudiation of the original agreement between Photon R&D and the Company dated October 1, 2008 (the "2008 Agreement") and Photon R&D's reliance on and conduct pursuant to addenda (the "2013 Addenda") to the 2008 Agreement (see news release of August 23, 2016 for a description of the 2008 Agreement and the 2013 Addenda).

The Court concurrently considered an application brought by Photon R&D for an Order that the Company continue to pay royalties, support fees and consulting fees to Photon R&D under the disputed 2013 Addenda pending trial of the action.

A transcript of the Court's oral judgment has been ordered on an expedited basis, following which the Court will release written Reasons for Judgment, which will be available with the Supreme Court of British Columbia. While the result of the applications will not change, the phrasing of the orders is subject to refinement by the Court.

About Photon Control Inc.

Photon Control Inc. designs, manufactures and distributes a wide range of optical sensors & instruments to measure temperature, pressure, position, and flow. These products are used by original equipment manufacturers (OEM) as well as end-users in the Semiconductor, Oil and Gas, Power, Life Science, and Manufacturing industries. Photon Control's products provide high accuracy and reliability in extreme conditions and are supported by a team of experts that offer onsite installation, training, and support. Photon Control Inc. also provides engineering services for customized optical measurement systems. Headquartered in an ISO 9001:2008 manufacturing facility in Burnaby, BC, Photon Control Inc. is listed on the TSX Venture Exchange, trading under the symbol ''PHO". Additional information about the company can be found at www.photon-control.com/investorrelations.html.  

Forward-Looking Statements
This News Release contains "forward looking statements" within the meaning of applicable Canadian securities legislation. Such forward looking statements include, without limitation, statements with respect to the Claim, the Company's assessment of and intentions with respect to the Claim, the unknown outcome of the Claim which is subject to proof at trial, and otherwise concern the business and anticipated financial performance of the Company and the Company's objectives, goals, liquidity, sources of capital, expectations of sales and continued development of technologies and products.

These forward looking statements are based on certain factors and assumptions, including, without limitation, the Company's evidence forming the basis of the Claim; the Company's financial and management resources and ability to pursue the Claim; the Company's ability to successfully complete new purchase orders along the timelines expected; continued and future demand for the Company's products; continued sales to the Company's major customers; and the Company's ability to continue and further enhance revenue diversification and open new market opportunities.

Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation, the Company may not be successful in obtaining the relief sought in the Claim and, therefore, may not have the all of the intellectual property rights and goodwill that it believes that it has and should have, the Company may face other legal action arising from the matters that are the subject of the Claim, additional measures and controls may not be implemented as expected or along the timelines anticipated, risks associated with technical difficulties or delays in product introductions, improvements, implementation; uncertainties in product pricing or other initiatives of the Company and its competitors; and risks in pursuing additional development projects to support existing customers or pursue other business opportunities.

The foregoing assumptions, risks and uncertainties are not exhaustive of the items that may affect our forward looking statements. Should underlying assumptions prove to be incorrect or one or more of these risks and uncertainties materialize, actual results may vary materially from those described in the forward looking statements. The Company's forward looking statements are based on beliefs, expectations and opinions of management on the date the statements are made. For the reasons set forth above, readers should not place undue reliance on forward looking statements. The Company undertakes no obligation to update or revise any forward looking statements included herein if these beliefs, estimates and opinions or other circumstances should change, except as otherwise required by applicable law.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Photon Control Inc.

For further information: Investor Relations Contact: Matt Glover, Liolios Group, Inc., PHO@liolios.com, 949.574.3860

RELATED LINKS
http://www.photon-control.com

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